You Cannot Retire Without Understanding These Risks

Co-produced with Trapping Value

Almost as soon as people start their first job, they start thinking about retirement. The 9-5 grind starts the desire for a time when the routine no longer has to be followed. On the investing side, savings start flowing toward that goal. The intelligent investor knows that every penny saved is an extra penny earned, and frugality becomes the best friend of the future retiree. As retirement approaches, and decades of planning start bearing fruit, everything starts falling into place for that final step to that plunge. But what if it’s all about to crumble? What if all the assumptions and formulas are about to fail? Is that likely or even possible today? We go over where the financial realities meet the retirement dreams and tell you why there are some serious risks to retiring today.

Risk 1: Exceptionally Low Interest Rates

The low interest rates have been a boon to the housing industry. They have helped mortgage refinancing and cash out refinancing, supporting the consumer. They have been a boon to the stock markets as companies have gotten ever lower costs year after year. They have helped buybacks as equity yields have exceeded debt yields. So, why would exceptionally low interest rates be a risk?

They are a risk as a large part of your portfolio now yields next to nothing. If you want a risk-free buffer as investors have had in the past, well you will get paid precisely 0% (or close to that) for it. This is what Jim Grant famously coined as the “Return-Free-Risk,” making a mockery of the term Risk-Free-Return. By buying bonds today, you have virtually zero returns with a devastating downside. For example, the iShares 20+ Year Treasury Bond ETF (TLT) has a 30-day SEC yield of 1.15%. It also comes with a bond duration of 19.07 years.

Source: iShares

What’s Bond Duration you might ask? Well, most people are unaware of this, and when we asked people, we got some interesting responses, including one where someone said it was the time between James Bond movie releases. The correct answer is that Bond Duration is an approximate measure of a bond’s price sensitivity to changes in interest rates. Duration, in effect, measures the approximate amount of capital gain or losses a bond portfolio will incur with changing interest rates.

If a bond portfolio has a duration of 10 years, for example, its price will rise about 10% if its yield drops by a percentage point (100 basis points), and its price will fall by about 10% if its yield rises by 1%. Similarly, if a bond portfolio has a duration of five years, its price can be expected to rise/fall about 5% for a change of 100 basis points in its yield. Since interest rates can only go up from here, the probability of capital losses is what we need to focus on.

Now, let’s apply this to the TLT example from above.

We have a duration of 19 years – you are essentially going to lose 19% in capital if interest rates rise 100 basis points (1%) across the curve. Now, remember that you are getting 1.15% in yield from TLT. So, in essence, you are losing 16.5 years (19%/1.15%) of interest payments in capital losses, if interest rates move 100 basis points.

Those are approximations, and concepts like “convexity” will alter final performance. But the crux of the issue is correct. Exceptional risk for virtually no returns. Those retiring today are now all-in on this interest suppression experiment, and the risks for a bond blow-up are rather extreme.

Risk 2: Exceptionally Unpriced Inflation Risk

The other side of the low interest conundrum is that no one anywhere is pricing in inflation risk. Real interest rates, that’s actual (nominal) interest rates minus inflation, are firmly negative. That’s coupled with the largest expansion of monetary stimulus in the history of mankind. So far, neither the bond market nor the Federal Reserve seems remotely concerned. Fiscal expansion continues unabated, and debt is being piled on at the fastest pace. History has shown us that nominal GDP and inflation often swing with rapid money supply growth.


If we get a huge inflation spike, it will likely be a very big whammy to both equity prices and to bond prices. Right now, neither market has priced it in, making it one of the real outlier years where the traditional 60/40 portfolio (or 60% equity and 40% bonds) could suffer a 25%-plus decline. We have addressed this risk and its timeline, and you can read our thoughts on it here and here. We will be following this threat over time and recommending what is best likely to work as an offset.

Risk 3: Exceptionally-Expensive Multiples For Broad Market

While the first two risks impact the bond market more, this one has a direct impact on equity return. There are many measures of valuation, but we like Enterprise Value to EBITDA and its strong correlation with forward returns. This valuation metric also is unique because it takes into account debt levels which most other valuation methods don’t. Today, it’s projecting a negative annualized return for the next decade.

Source: Neal Falkenberry, Twitter, June 30

Some better known slow-growing companies are trading at even higher multiples, upwards of 20X.

Price to sales is another measure we favor, and that is not singing like a canary either. Current price to sales ratio is the highest ever, and it has not even been adjusted for the extremely weak Q2-2020.


Price to sales is a far better indicator than price to earnings, as sales are much harder to manipulate with accounting tricks. This ratio also adjusts for the fact that margins revert-to-mean over time, and earnings are not always steady. All these measures suggest that the passive investing large-cap portfolio will produce under 3% a year over the next decade. Investors retiring and counting on 6%-9% equity returns will likely be extremely disappointed.

Risk 4: Walking toward an energy crisis

While the last thing that is on anyone’s mind is a shortage of oil or natural gas, the groundwork is being laid for a very tight energy market. The oil price war alongside the pandemic has cut budgets to the bare bone, and energy capex has dried up. Rystad initially estimated a 17% decrease for 2020 capex:

Source: Rystad Energy

Recent surveys have shown that’s proving very conservative.

Source: World Oil

At this point, the base decline rates in the system are beginning to come to the surface, and we expect global production to decline in both 2020 and 2021.

As a retiree, there’s a built-in assumption that the economy will grow over time. If that assumption pans out, and if the economic GDP output exceeds to 2019 levels at some point, perhaps in 2021 or even in 2022, the oil and gas supply will severely be lacking. Initially, we could draw on inventories, but that won’t last long. This could create a vicious spike which could again be very detrimental to non-energy equities. It also could limit GDP itself as the literal “fuel” for the GDP is missing. This also would reinforce all three risks mentioned above, notably risk 2, and create a feedback loop for inflation. While supply will respond to higher prices, it could make for some difficult years for the new retiree.


We brought up four risks today that everyone retiring soon should consider. While risks exist all the time, the key difference today is that very few assets are priced for the risk of the current environment. We have not even discussed risks specific to COVID-19 as that’s a whole different can of worms. Investors should not assume that the traditional 60/40 portfolio (60% stocks, 40% bonds) will navigate this remotely well. In fact, it seems guaranteed to not deliver the required returns for retirement. In Part 2, we will look at a few more risks that investors should make sure they are aware of before jumping into retirement. Once you have factored these in, you can plan your approach.

Thanks for reading! If you liked this article, and want to be notified about the 2nd part of the series, please scroll up and click “Follow” next to my name to receive our future updates.

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We want a diverse area with moderate population, warm, beach and culture — so where should we retire?

We are African-Americans and want to retire to a diverse area with moderate population, warm, beach, culture. We can afford a better-than-average lifestyle and want to feel accepted in our new community — hopefully somewhere with high walkability and homes with character. And maybe near a major airport…. for lots of traveling.

Let me know what you come up with. Thanks.


Dear Jennifer,

We all know there are plenty of beach towns in the U.S., but finding one with personality is a bigger challenge.

I’m going to leave out some obvious places, like Miami Beach and, though less diverse, Hilton Head. On the West Coast, no Southern California. Too obvious. Plus, while you can afford a better-than average lifestyle, home prices there are so high that they could hamper your travel budget. The same goes for Sag Harbor and the Hamptons more broadly (plus you’d still have winter on Long Island).

Instead, I’ll look for some off-the-beaten path possibilities. I’m sure readers will have their own suggestions.

As always, explore the area in all seasons, and be realistic about the retirement budget. When you find your dream place, ask which areas are susceptible to flooding during hurricanes and other storms.

Read:There is more to picking a place to retire than low taxes — avoid these 5 expensive mistakes

The Atlantic: Wilmington, North Carolina

Check out the Cape Fear region, which includes Wilmington as well as beach towns like Carolina Beach and the more upscale Wrightsville Beach.

Wilmington is growing quickly and at 123,000 people has more than half of New Hanover County’s population. The share of those 65 and older are roughly in line with the U.S. average. Look for a place where you’ll catch a breeze off the Intracoastal Waterway or the ocean to counter the summer humidity — so not too far inland.

You’ll have no shortage of cultural offerings, starting with Thalian Hall, the Cameron Art Museum and the Wilson Center. The University of North Carolina Wilmington, which has 17,000 students, lets those 65 and older audit classes for free, while its Osher Lifelong Learning Institute offers shorter courses to those 50 and older.

Be sure to explore the Gullah Geechee Cultural Heritage Corridor, which stretches from Wilmington to Jacksonville, Fla., and is home to cultural groups descended from enslaved peoples from West and Central Africa. Poplar Grove Plantation is one local site.

Winter days get into the 50s, with average lows in the 40s. Average highs in July are in the 80s.

Here’s what’s on the housing market now in Wilmington and in New Hanover County using (which, like MarketWatch, is owned by News Corp.).

As for travel, while Wilmington has an airport, you’ll have more choices flying from Raleigh two hours away.

The Gulf of Mexico: Gulfport, Florida

Florida’s popularity with retirees is no secret, in part because it’s affordable and has no state income tax. But all too often, home means living in a high rise or a gated community.

Gulfport, though, is described as how Key West was before it became overrun with tourists.

This town of 12,000, just west of St. Petersburg, is your artsy, funky, walkable spot in the middle of the Tampa Bay metro area and its 3 million people. You’ll also find plenty of retirees; 30% of Gulfport’s residents are 65 or older.

Gulfport comes with sunset views from its own (man-made) strip of sand over Boca Ciega Bay so, yes, it’s on the Gulf side of Florida but technically not on the Gulf of Mexico. But opposite the bay is St. Pete Beach, which gets raves from TripAdvisor (a local says head to the Pass-A-Grille section at the southern tip). When you tire of that, there are more white-sand beaches to sink your toes in, including Siesta Beach in Sarasota an hour south (and Dr. Beach’s pick in 2017 for best beach in the U.S.) as well as Caladesi Island State Park (No. 6 on Dr. Beach’s list this year) an hour north.

And if you just want to walk, don’t overlook the 45-mile Pinellas Trail that stretches from St. Petersburg to Tarpon Springs and goes through the northern edge of Gulfport.

For bigger getaways, there’s Tampa International Airport.

To get a sense of the local housing market, here’s what’s for sale now, again using

As you explore the Tampa area, also check out Safety Harbor, a town of 18,000 on the western side of Tampa Bay with its own walkable downtown, and Dunedin (pronounced Duh-nee-din) north of Clearwater that’s also popular with retirees. You know there’s plenty of cultural offerings in a metro this size. One that might be easy to overlook: the Dr. Carter G. Woodson African-American Museum in St. Petersburg.

The Pacific: Oahu, Hawaii

If year-round pleasant weather is the priority, Hawaii can’t be beat. Average highs are in the 80s year-round, and average lows bottom out in the mid-60s. Of course there’s no shortage of beautiful beaches.

When you tire of water, take advantage of wonderful hiking opportunities. And while the focus of your international travels might shift toward Asia, you may want to spend more time just staying, discovering Hawaiian culture and exploring some of the national parks.

You admittedly won’t find a big population of African-Americans here, but Hawaiians have a much more open and fluid view of race and diversity than many of us on the mainland.

Start your search for your retirement life on Oahu Island. About a third of the island’s million residents live in Honolulu itself, one of the country’s most diverse and affluent cities and the birthplace of President Barack Obama. Curious about sites associated with him in some way? Here are even more.

You’ll find plenty of cultural offerings in Honolulu (including some of Hawaii’s best festivals, as voted by readers of Hawai’i Magazine), plus the state university (those 60 and older can audit classes for free).

There’s even Costco, if that’s your thing. Oh, and that Elvis statue

Yes, there’s the cost of getting everything to Hawaii — some things will be even more expensive than parts of California. Here’s what the local housing market looks like.

If Honolulu is too pricey, consider some of the smaller towns on the island. Or check out the less-populated (and cheaper) Big Island, also known as Hawaii Island. Start with the Kalaoa area.

Readers, where should Jennifer retire?

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I’ve got a budget of $3,300 a month and want to be near some ‘wild’ areas — where should I retire?

I want to retire within a one day (about 10-hour) drive of my family in Northern New Jersey. I want to be on the water, fresh or salt, and near some “wild” areas like national or state parks, wilderness areas, etc. My retirement income will be about $3,300 a month before taxes and I’d like to keep those to a minimum. Obviously, a good hospital and airport are important and I like local theater, live music and a college town is a plus.

What have you got for me?


Dear Ken,

Natural beauty, low taxes and access to good medical care and entertainment options — you’re hardly alone. Your budget of just under $40,000 makes it more of a challenge, but here are some strong suggestions. Given how housing costs and crime rates can vary, don’t forget to check out the nearby towns.

Morgantown, West Virginia

That request for “wild” areas grabbed me, and my first thought was West Virginia, specifically Morgantown, a river town of 30,000 nestled in the Appalachian foothills and home to West Virginia University and about 27,000 college students. As you’ve figured out, a college town punches above its weight with amenities, in this case a teaching hospital as well as theater and music.

You’ve got water — especially the Cheat River to the east and its whitewater rapids. Cheat Lake and Copper Rock State Forest are less than half an hour east of the city, so there are plenty of outdoor opportunities. Plus Morgantown is in the middle of the 238-mile Parkersburg to Pittsburgh (P2P) Rail-Trail under development (overlapping in part with the Great Allegheny Passage) that will open up even more options.

Taxes are relatively low; the National Tax Foundation says the state ranks 19th for “Tax Freedom Day” — how long it takes to pay all federal, state and local taxes for the year.

You didn’t mention whether you’ll be selling a house and using the proceeds for housing. So I’m assuming you’ll be renting. The median rent, including utilities, is $821, according to the Census Bureau, or about 25% of your budget. You can see what’s available now on (owned, just like MarketWatch, by News Corp.).

Overall, the cost of living here is lower than in my other two suggestions.

The airport isn’t great; flights are only to Pittsburgh and BWI airports. Or you can drive two hours to Pittsburgh (an area you may also want to check out, but affordable housing will be harder to find). The drive to northern New Jersey is about six hours.

Roanoke, Virginia

If Morgantown doesn’t appeal, what about Roanoke, Va., with the Blue Ridge Mountains and the George Washington and Jefferson National Forests as your playground and the Appalachian Trail around the corner? You’d have some great hiking and mountain-biking options. Plus there’s Smith Mountain Lake with 500 miles of shoreline an hour away.

Roanoke is a bigger city than Morgantown, with about 100,000 people, and has a better airport. There’s a walkable, lively downtown, the extensive Roanoke Valley Greenway system for more biking and walking options, one of the oldest farmers markets in the country, plenty of cultural options, including some minor-league sports, and three health-care systems, including the Veterans’ Administration and a level 1 trauma center.

If you’re looking for craft beer, the Roanoke area is your place. On top of the locals, Deschutes, the Bend, Ore., brewer, is building its East Coast brewery here.

The town’s average age is actually decreasing as more young professionals move in, a good sign. But the college town feeling may be less pronounced than in my other choices; Roanoke College is a 2,000-student liberal arts school. You can always get your big-sports fix at Virginia Tech 45 minutes away in the smaller city of Blacksburg.

Virginia isn’t as tax-friendly as West Virginia, but the overall cost of living in the Roanoke area is 10% below national average. The median rent in the county is $949, according to the Census Bureau, but still under 30% of your budget. (See what’s on the market now)

And if you decide you want to supplement your income, the Roanoke area’s unemployment rate has been below the national average, unlike Morgantown, making it easier to get a job.

The drive to North Jersey is seven hours along Skyline Drive (and you miss the Washington, D.C. traffic). There’s also Amtrak service for those times you don’t want to drive.

Columbia, South Carolina

If you’re willing to drive a bit more than 10 hours, Columbia, S.C. pops up as a prime choice in MarketWatch’s “where should I retire” tool.

This city of 133,000 people is another river town and home to both the state capital and the University of South Carolina with its 35,000 students and SEC sports. Of the three, this definitely will offer you the most cultural choices, and craft brewers abound too. Minor-league baseball offers more summer entertainment, and there are plenty of biking and walking trails. As for your water and wild fix, Lake Murray, a 50,000-acre man-made lake, is 15 miles away and Harbison State Forest is a bit closer. Congaree National Park, which preserves the largest tract of old growth bottomland hardwood forest left in the United States, is a half-hour away.

The airport you want? Nonstops to eight major cities, mostly on the East Coast. The far bigger Charlotte, N.C., airport is less than two hours away. It, too, has Amtrak service.

Of the three, temperatures are the hottest, and it is the muggiest. But if you hate snow, you’ll barely get any here.

South Carolina matches West Virginia in tax-friendliness, using that same National Tax Foundation calculation. Median rents across the county are $952, according to the Census Bureau, and the city itself is a bit cheaper. (Here’s what’s on the market now)

Overall, the cost of living is about 8% below the national average. Unemployment here, too, has been below the national average.

A word of warning: it’s being discovered.

Of course, the numbers will tell you only so much. Spend some time in each place you’re considering and see what clicks with you. You may also want to spend some time thinking more deeply about taxes and which kind you’ll pay. Many states don’t tax Social Security. That may make Pennsylvania and Maryland more appealing, for example. On the flip side, sales taxes in Columbia are an above-average 8%.

Read: I ran the tax numbers for a semi-retired life, and they look amazing

I did look north, but Burlington, VT, is a tougher budget fit. Ithaca, NY, was cast aside for the same reason. Anyone have any other suggestions for Ken? Weigh in below.

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This is the best state to retire — but you may not want to go there just yet

The best state for retirees to live these days is also one many Americans might want to avoid — at least for now.

Florida topped the list of the best states for retirees to live, in a recent study from Blacktower Financial Management Group. A quarter of the state’s population is age 60 or older, and it boasts sandy beaches and warm temperatures. The average home price is $252,000, and life expectancy is just shy of 80 years old there, the analysis found. The sunshine state jumped nine places from where it ranked in 2019.

Florida may be a hotspot for retirees — but it’s also one of the states that has seen a troubling spike in coronavirus cases, the governor confirmed this week. Other states with rising numbers of cases include Oklahoma, Texas, Idaho and South Carolina, according to NPR.

See:Here’s exactly where you should retire — based on what’s important to you

The southern state surpassed 100,000 total COVID-19 cases on Monday, and saw its highest peak in cases since the pandemic first began. More than 98,000 residents tested positive for the virus, and more than 3,000 people died from it. Most patients who recently tested positive were in their 20s and 30s, down from the average age of age 65 a few months ago, the governor said. Overall, the U.S. has had 2.3 million cases, with a slight uptick in the last three weeks.

Minnesota ranked second, followed by Iowa, Ohio and Texas. The remaining top 10 states included Wisconsin, Nebraska, Pennsylvania, Illinois and Idaho. Blacktower analyzed and weighted crime, cost of living, older populations, average property prices and life expectancy to create its ranking.

The worst state to retire was Alaska, which had the highest crime rate, the firm found. Hawaii had the highest life expectancy in the U.S. and Mississippi had the best cost of living for retirees, with its inexpensive food and property prices. West Virginia had the lowest average property prices.

Also see:Hot springs in January, no traffic and universal health care. The best retirement escape you’ve never heard of

Though rankings can be helpful, these lists are usually only one step in determining where to move for retirement. There is so much to consider when choosing where to retire, such as income and property taxes, proximity to family, as well as lifestyle and entertainment. Another factor is health care, and being close to facilities that cater to specific health concerns.

Some retirees may not want to move to another state, but another country entirely, which comes with its own list of factors to weigh. A few examples: health insurance, off-season weather and earning active or passive income.

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Can my investments survive a crisis if I retire early? It did for these early retirees living in Mexico

Nearly 30 years ago, Billy and Akaisha Kaderli decided they wanted to retire at 38 — in that time, they have experienced cities around the world and their money has survived numerous financial crises. Yet, they’re still doing better financially than when they started their journey, they said.

It was 1991, and the Kaderlis, who were living in Santa Cruz, Calif., had owned a restaurant for 10 years. Billy was a trained French chef working seven days a week for breakfast, lunch and dinner, at the restaurant, while Akaisha managed the business. Years into running the restaurant, Billy left to work at a brokerage firm, where he continued to work nights, weekends and holidays in his new job. Akaisha continued to manage the restaurant. “We finally asked, how much is too much?” Akaisha said. “Billy came to me with the idea of selling everything and traveling the world.”

This was well before the term FIRE, or “Financial Independence, Retire Early,” became common. The FIRE movement’s followers strive to leave the workforce well before traditional retirement age, or at least curtail their reliance on a paycheck.

The couple, who blog at Retire Early Lifestyle, invested 100% of their assets in the S&P 500

and let the market work for them. “Thirty years later and we have a higher net-worth today than back then, and that’s after inflation and spending,” he said.

It’s been quite an adventure, including the one time Akaisha almost lost her finger in Guatemala during the country’s independence day celebrations. A doctor opened up his practice to take care of her, and even with travel to the city, 11 visits with a surgeon, anesthesia and everything else, the total out-of-pocket cost was less than $3,000. As pioneers in financial independence they didn’t have the thousands of blogs about how to save and invest to accomplish these goals. In fact, during the early days they got their news — and tacos — from a nearby American Legion post.

See:How to start on your financial independence journey

How bad is it if I withdraw from my 401(k) during the pandemic?

Billy and Akaisha spoke with MarketWatch about what early retirement was like before FIRE, how they have managed, and what their experiences have been like during the COVID-19 crisis. The interview was lightly edited for clarity and length.

MarketWatch: Did you have any models or inspirations when you were preparing for this change?

Billy: I had a magazine of a couple that lived in a sailboat with a child and that was always an inspiration for me, as well as some friends.

MW: How many countries have you seen? Any favorites — and why?

Billy: Our favorite place is where we are now: Chapala, Mexico. It is the largest lake in Mexico.

Akaisha: We don’t really keep track or have a bucket list. We have always done a lot of travel. It was a passion of ours to see Central and South America, Europe, all through Asia. We have traveled the U.S. and Canada. We went to Bali and Vietnam.

Billy: We spent years in Chiang Mai, Thailand. Asia is a great example — it is so different than the U.S., and Mexico also has a different culture. We enjoy immersing ourselves in those cultures.

MW: From a retirement perspective, how do all of these countries differ from the U.S.? In positive or negative ways.

Billy: From a retirement viewpoint, Mexico is on sale. The cost of living is favorable to the U.S. dollar. The big question is health care. Everyone wants to know. The [doctors there] know just as much as the guys up north. If I want to see a cardiologist, I just go walk to his office in the morning. It’s not like a referral. If he’s in, he’ll see me. If not, tomorrow. We have Medicare as a backup if we happen to be in the U.S.

Akaisha: We pay for mostly everything out of pocket. It’s affordable. We did that in Thailand as well.

MW: It wasn’t called FIRE when you did it, but how has the concept or execution of early retirement changed over the years? Do you think it’s more common? Easier or harder to accomplish?

Billy: The investing side of the equation is easier than when we retired back in 1991. The internet hadn’t been widely used yet, so there was no online banking. There were ATMs but they were scattered.

Akaisha: Also no email, no WhatsApp, no Skype. We used to write letters.

MW: How did you weather the market’s ups and downs in the last 30 years?

Billy: You have to have faith in the economic model and the thing is not to panic out of the market. Know that this is a temporary situation and it can be painful and can take years to come out of, but the biggest thing is making an irrational move that could hurt you late in life. Now that we’re 67, the people starting out in early retirement have asset allocation more aggressive than ours, but we still have a 60-40 split with 10 years’ worth of cash.

Akaisha: In times like this, like in 2008, Y2K or 1987, we all had to jump in or out. The future is not bound to what the market is doing today. We can have market recovery and have our lives paid for.

Billy and Akaisha Kaderli

MW: You’ve mentioned working and being retired during a major crisis, like the recession in 2008-09. How have you been managing during this one, and is it different for you than others?

Akaisha: We discussed going back to work during the 2008-09 recession, but we never did. We considered what it would cost us to return to work — the price of professional clothing, need for a car, returning to the States, and which state? Cost of fuel and vehicle maintenance, eating lunch out or packaging it for each day) — and decided that instead, we’d wait it out.

Since we had that previous discussion over a decade ago, when the pandemic hit and the market went down, there was no need for a discussion again. We already knew what our answer was. We have been living off our investments since 1991 and continue to do so to this day with a higher net worth after spending and inflation than when we started.

‘We have been living off our investments since 1991 and continue to do so to this day with a higher net worth after spending and inflation than when we started.’

— Akaisha Kaderli

I’d like to mention that the FIRE lifestyle prepares one for situations like COVID, in that we are already living within our means and have no debt. Billy and I have geographically arbitraged our location where we have a great cost of living (less than $30,000 a year) and plenty of affordable entertainment. So, our lifestyle puts no pressure on our portfolio and we have not had a need to touch it.

Billy: In the 2008–09 recession we continued traveling the world and living our adventurous lifestyle. Today we have been forced to stay put. I was in Panajachel, Lake Atitlan, Guatemala in early March, when they shut down the international airport, all public transportation including buses, taxis and the borders. There was no way I was going to be denied getting out of the country and back to Akaisha in Chapala, Mexico. I paid handsomely for a private driver to travel the six-hour trip but was stopped by a police roadblock two hours from the border. The police turned my driver back but I could continue. My Indiana Jones days are over and hitchhiking in the mountains of Guatemala at 67 years old was an experience. Three days later I made it to Chapala.

MW: Some people may have seen their portfolios hit hard by this pandemic. What do you think people can do to recover or follow through on their plans to retire early?

Billy: It really depends on where they are along their path to financial independence. With the markets taking such a hit and if you are in the accumulation phase I would suggest having dividends reinvested and staying the course of dollar-cost averaging into Vanguard Total Market Index.

Ten years from now no one will remember this period as it will be a blip on the chart. I am assuming that those who are FIRE-ING already have several years of lifestyle expenses in cash, as we recommend, so they do not need to sell at a time when the market is down to cover living costs.

If one is focused on retiring early, now is the time to live that lifestyle with moderated expenses. Housing, transportation, taxes and food/entertainment are the categories of largest expense, so look there to see what you can do to control costs and track your spending.

MW: Has being away from the U.S. made it easier or harder during this health crisis? How is your area coping lately?

Billy: It’s been easier in that we are able to walk anywhere to get our supplies, no need for public transportation or a car. Open air markets are abundant with foodstuffs, and grocery store shelves have not been empty. Yes, there was some panic buying in the town up the road, but not here in Chapala, Mexico, where we live. The weather is outstanding with sunshine daily, no dark clouds, rain or snow during this “shelter in place” order, so that’s been good mentally and emotionally. People are friendly, ready to smile, and, of course, there is sanitary gel everywhere.

I am a trained French chef, so I took this opportunity to create many memorable dishes using local ingredients such as Bolillo dough that I wrapped around our beef Wellington. So, we definitely have not had any hardships regarding in-home dining.

That being said, there is confusion here too. One restaurant might be closed, but another provides take-out. One store might be opened to allow us to purchase a cellphone, but we cannot buy a pair of shorts in that same store. Wide open places like the walking path by the lake is closed, but sidewalks all throughout town are open.

Sadly, many small vendors and restaurants have lost their businesses and have no source of income, nor is there much of a safety net here. We do our best to contribute to our community with food to the homeless and unemployed and leaving large tips for servers when the business is open. It is going to take them a long time to recover financially.

Also see: COVID-19 crisis sparks ‘early retirement’ wave

MW: How do health concerns, like COVID-19 (but really anything), affect early retirees? And how do you plan or account for it differently at various stages, such as in your 30s, 40s, 50s, 60s and so on?

Akaisha: First, I would say, it depends on where one chooses to retire early. Health care access and costs in the States are much different than we have found living overseas. And of course, having children changes everything.

That being said, we have had routine services, operations, emergencies, colonoscopies, annual physicals, exams, dental and eye care all done overseas. We pay out of pocket for these services because they are both affordable and high quality of care.

Since we have not had a US-based health insurance policy for years (we are now on Medicare) the money we would have normally paid for this insurance, we placed in a personal account like a personal Health Savings Account to be used for medical needs. Some countries like Mexico, Panama and Ecuador have safety net insurance policies for expats that are affordable if one needs something major like cancer treatment, heart bypass or a hip replacement. But compared with the U.S. pricing, even those costs are fairly reasonable if one needs to pay out of pocket.

As far as living in the States, I would say first that for most people, major medical problems happen later in life. So, if a couple is young and with children, I would suggest several things:

• Get a policy with a large deductible, so that the premiums are manageable;

• Check out the health-sharing policies that are available (these are not insurance policies, but the cost of medical bills is shared among members);

• There are some doctors who provide services for cash, and their pricing is much lower, or you could possibly purchase a concierge plan. For a single annual fee, a doctor will provide you so many office visits, so many X-rays, and other necessary things a year. This can keep your health costs down;

• If one spouse works while the other is staying home, often that spouse can provide the insurance for the whole family. And if one is working digitally from home, this arrangement isn’t such a hardship;

• And of course, there is always medical tourism, especially for big things. (Editor’s note: Medical tourism is when you leave your city, state or country to receive medical treatment.)

MW: Is there any other advice you have for people interested in pursing early retirement — especially those starting out at a younger age, such as 20s or 30s?

Billy: This is a great opportunity to pour as much as they can in during these downturns, when shares are at a cheaper price. The power of time is something we don’t have. Compounding money over time is just amazing, so just get as much as you can and let the markets work for you.

Akaisha: The emotional component financial analysts don’t mention are more important than the number because you can always pick up some money in various ways. I would say not to run away from your job — the one thing I hear from young people is that they can’t wait to not work, but what’s your dream? Go toward your dream.

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